Evolving Crypto Trading Models Reveal the Power Shift of Westward Markets

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Recent blockchain analysis has highlighted a dramatic shift in trading patterns this year, from Asia to North America and Europe.

By analyzing trading activity on centralized exchanges of different days and time zones, blockchain data company Kaiko found that on Coinbase, Gemini, and Kraken, the ratio of weekly BTC / USD trade volume doubled from March 2020. This result showed that the Average weekend bitcoin trading volume is increasing compared to the average weekday volume on the three most popular exchanges among Western users.

Meanwhile, as shown in the chart below, the ratio of the BTC / USDT pair on crypto-crypto exchanges Binance, Huobi, and OKEx remained at around 1 in weekday and weekend volume over the past year. past year. The three exchanges represent the power of retail investors in East Asia, especially China.

Related: Market Wrap: Bitcoin Slides As Infrastructure Bill With Crypto Tax Provision Heads Home

In the derivatives market, Kaiko found that, on an hourly basis, the volume of bitcoin perpetual futures trading on Binance and FTX, the two largest derivatives exchanges, jumped around 4:00 p.m. UTC. The peak time for trading on the two exchanges overlaps between European and US trading hours, suggesting that the jurisdictions of the European Union and the United States have become “extremely” important to global crypto exchanges.

“With China cracking down on crypto trading and firms, a lot of the volume has shifted to North America over the past 12 months,” said Kevin Kang, founding director of US quantitative hedge fund BKCoin Capital. .

Kaiko’s report also shows that while the crypto community has focused on the growing presence of institutional investors, it may have underestimated an increase in the number of retail investors.

“This trend conflicts with Bitcoin’s institutional narrative as it assumes that retail participation is increasing,” Dessislava Aubert, research analyst at Kaiko, told CoinDesk.

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TradFi plays a role

Related: FTX Market Share In Bitcoin Futures Almost Doubled Since June

Kaiko’s findings also highlight how traditional finance investors may have played a role in changing trading behavior, according to market watchers.

Part of the increase in weekend trading volume could be attributed to automated trading tools that can shift some trading activity to the weekend, according to Kaiko. Traders who typically conduct high volume trades may choose to split their orders into smaller sizes over a longer period of time to “minimize execution costs and impact on prices,” Kaiko said.

“As more traditional market makers and quantitative stores [are] entering the [crypto] space, we are seeing higher liquidity on weekends than in the past, ”Kang said.

Joel Kruger, cryptocurrency strategist at institutional crypto exchange LMAX Digital, told CoinDesk that the volume of transactions over the past weekend at LMAX Digital was up 85% from the previous weekend, so that institutional investors were following the controversial $ 28 billion tax filing provision of the $ 1. trillion dollars in infrastructure bills in the United States.

“We are certainly seeing institutional players taking advantage of 24/7 market access,” Kruger said. “It means being able to react to developments as they occur instead of being stuck in a position and having to wait for the market to open on Monday.”

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